Sales of new homes dropped 17 percent in February following another big drop in January. This combined with a reported low level of mortgage purchase applications clearly spells out a Double Dip in the housing market. The question is not if there will be a double dip, the question is when will it end.
With the current signs I would not predict a snappy recovery in the housing market. The supply of homes is maintaining high levels due to a fast flow of foreclosures. With unemployment staying high, homeowners are unable to find work and end up behind on their mortgage payments. There needs to be job growth before the foreclosures will slow down.
Gas prices are up a ton! No matter how much you travel, if you own a vehicle you dread each trip to the gas pump. The gas prices and rising prices on good and other household costs are affecting home owners on their budgets. Less people can afford to save up for a down payment on their dream homes.
A report released yesterday, from Robert Shiller’s MacroMarkets, explains that nearly half of the 111 housing experts and economists questioned agree that housing will experience a double dip this year. None of those surveyed expect home prices to raise up to the levels they were before the crash within the next five years!
On the bright side, those who can qualify for a home loan and are financially fit to purchase a home can pick up a gem of a house at some of the lowest costs in history. Mortgage rates remain low and housing prices are low due to the high supply on the market. Homebuyers shouldn’t feel too much pressure to settle on a house less than their dream home.
